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HiiL POLICY BRIEF

User Friendly Contracts

March 22, 2022
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Photo by Anete Lusina from Pexels

 

Contracts are essential tools for enabling cooperation between people.  Although legal professionals are comfortable with such documents, most people find contracts difficult to understand. A growing group of scholars and innovators is trying to make contracting a more positive experience. They are developing user-friendly contracts that are fair and transparent and help people to better understand their rights and obligations. 

Two types of contract practices have emerged from their efforts: online contracting and visual, simplified and plain language contracts.  Their starting point is the user, who may be illiterate, speak a different language or just lacks the time to read a lengthy document. Paradigms behind this new development in the field of contracts include proactive law, responsive law, people law, legal design and people-centred justice. 

In this policy brief, we seek to answer the question

“How might we increase access to justice for people by scaling and improving user-friendly contracts?”

Our objective is to identify critical success factors for organisations providing user-friendly contracts that are involved in scaling and improving the quality of service delivery. 

To scale the usage of these contracts, there is a need to market the idea and its underlying vision. Online support for contracting is already taking off. Regulatory bodies need to validate the legal enforceability of visual contracts which can increase the confidence of individuals, small businesses and legal professionals in using them. As a next step, we expect user-friendly contracts to embrace principles of relational contracting to further strengthen the relationship between contracting parties. 

1. A Better Contracting Experience

Contracts between two parties outline roles and responsibilities, mode of communication and dispute resolution methods between the parties. They also provide for contingency planning, timelines and financial obligations. Lawyers draft contracts using standard or previously tested forms, clauses and templates. They try to ensure that the interests of their clients are protected by providing solutions for all contingencies, even if they are unlikely, and by making the contract enforceable and binding and unambiguous [1].

Although legal professionals are comfortable with such documents, people find such contracts lengthy, unclear and filled with jargon or legalese [2]. Research on how people experience contracts reveals that people feel alienated by contracts, assuming that the text will be interpreted literally, that parties will be obligated to perform their duties and that by signing the contract they are giving away their rights. They overlook that contracts, and contract law, can also protect them [3].

A growing group of scholars and innovators is trying to make contracts a more positive experience. They are developing user-friendly contracts that are fair and transparent and help people to better understand their rights and obligations. In doing so,  they want to safeguard fundamental relationships – at work, about money, between family members. They believe that the contracting process can facilitate better understanding between the contracting parties and improve their relationship. Their starting point is the user, who may be illiterate, speak a different language or just lacks the time to read a lengthy document. Paradigms behind this new development in the field of contracts include proactive law, responsive law, people law and legal design. 

At HiiL, we see this trend of user-friendly contracts as a promising avenue towards people-centred justice. Working from Sustainable Development Goal 16.3 – ensure equal access to justice for all – people-centred justice is a pathway to strengthen justice systems. It puts people and the outcomes people need at the centre, not institutions nor existing procedures. Of the service delivery models that deliver people-centred justice services, user-friendly contracts stand out prominently. We call them a gamechanger, when we are looking for service delivery models that are scalable, sustainable, affordable and effective.

1.1 Online contracting

User-friendly contracts encompasses online contracting, plain language contracting, simplified and comic or visual contracts. Online contracting helps individuals and small businesses in accessing legal documents such as wills, uncontested divorce documents, power of attorney and privacy statements, terms of use, sales agreements and employment contracts. Users can customise the online templates according to their own needs, and have their agreements checked by a lawyer. These contracts are more affordable than the contracts drafted by law firms. Many of the platforms that provide online contracting also allow users to store the documents, sign them digitally and collaborate with contracting parties and team members in drafting contracts. They allow small and medium scale enterprises to register their business and trademarks, apply for patents and also connect them with vetted lawyers if they want legal advice. Some examples of companies providing automated contracts are LegalZoom in the USA, VakilSearch in India, Avodocs in Ukraine/USA and DIYLaw and LawPadi in Nigeria [4]. As the examples above suggest, user-friendly contracts have been developed primarily by private companies in both low income and high income countries. In terms of funding, online contracting has received support from venture capitalists or private equity as in the case of LegalZoom and VakilSearch [5]. In high income countries, they can face barriers in the form of opposition from lawyers and bar associations as they question the legal enforceability of contracts that are automated or not drafted by lawyers themselves. In low income countries, online contracting companies are struggling to replicate the scale their counterparts achieved in high income countries.

1.2 Visual, plain language and simplified contracting

Examples of simplified, plain language and visual contracts are Visual Contracts in the Netherlands and Creative Contracts in South Africa. Visualisation in contracts ‘refers to adding flowcharts, icons, timelines, images, matrices to highlight, clarify and explain the content [7].  So far, visual contracts have been used to develop employment contracts, forms of informed consent for medical procedures and non-disclosure agreements [8]. The main advantage of these contracts is that they make rights, obligations and terms and conditions easy to understand for the contracting parties and therefore facilitate better relationships between contracting parties.

Along with visuals, contractual terms are written using plain language unlike traditional contracts that are filled with legalese which everyday people cannot understand. It entails breaking down long sentences into shorter sentences, replacing archaic and Latin words with words that are understood by the public and other such measures. Proponents of the plain English language movement argue that laws are primarily meant to address the needs of ordinary people, and not lawyers and judges. So they should be drafted in a way that they are ‘fully intelligible’ to their primary users. The UK, USA, Australia, Canada and other English speaking countries have already begun using plain language to draft legislations and government forms [9].

Simplified contracts refer to removal of irrelevant clauses and inserting terms which are fair and balanced for both parties. The objective of simplifying contracts is to meet the needs and requirements of both parties to the contract and help them arrive at an agreement swiftly.

Visual, simplified and plain language contracts are a relatively recent addition to the field of contract design. Creative Contracts from South Africa that crafts contracts in the form of a comic, has received funding from HiiL’s Justice Accelerator as well as corporate clients [10]. Plain language and simplified contracts that facilitate relationships between contracting parties have been developed by in-house legal departments of companies such as General Electric and non-profit organisations such as World Commerce and Contracting [11]. However, both visual contracts and plain language, simplified contracts are yet to be accepted by legal professionals across the globe.

In this policy brief, we seek to answer the question “How might we increase access to justice for people by scaling and improving user-friendly contracts?” Our objective is to identify critical success factors for organisations providing user-friendly contracts in scaling and improving the quality of service delivery. Justice workers can use this policy brief to understand ‘what works’ when trying to scale user-friendly contracts and improve the quality of justice that they deliver. We use the examples of DIY Law in Nigeria, Creative Contracts in South Africa, World Commerce and Contracting in the UK and Avodocs in Ukraine to identify the critical success factors and connect these experiences to state of the art on these factors in the research literature.

In sharing this knowledge, we hope to make justice accessible, affordable and effective for our ultimate beneficiaries — the people.

1.3 Methodology

To answer the question “How to scale user-friendly contracts to increase access to justice?”, we formed a working group of external experts. To guide the discussions with working group members, we identified the following design questions:

  • How might we improve the effectiveness of user-friendly contracts?
  • How might we support user-friendly contracts with standardisation and tools?
  • How might we develop the enabling environment for user-friendly contracts?
  • How might we make user-friendly contracts affordable and sustainable?
  • How might we build user-friendly contracts into a scalable operation?
  • How might we market a user-friendly contract delivery model?

The working group engaged with these design questions and from this dialogue emerged the critical success factors that can help in scaling user-friendly contracts.

To select members for the group, we identified six experts representing diverse demographics and expertise (innovators, policymakers, investors, legal professionals, civil society) from within and outside HiiL’s network.

They are:

We organised six roundtable discussions between June 2021 to February 2022 to facilitate the conversations on the design questions among the experts. 

This policy brief summarises the findings of the roundtable discussions and lessons learnt from experiences of working group members and other innovators in setting up user-friendly contracts including: 

2.Critical Success Factors

In the sections below, we identified five critical success factors based on discussions with working group members and examples of and to scale user-friendly contracts that emerged from the conversations during the roundtables. We also include main takeaways from the cases that we worked on with support from the members of the working group.

2.1 Optimising the user-experience

The approach of preventive law or proactive law towards legal problems is, as the name suggests, to prevent problems from arising and achieve desirable outcomes for all parties involved. Both paradigms look beyond risk management and focus on providing clarity on rights and obligations. Legal Design which emerged from proactive or preventive law improves legal communication by providing services and products that are user-friendly. A combination of law and design thinking, it offers tools and methods to make legal documents transparent and user-centred [12].

The working group members, too, believe that user-centred design of legal documents or contracts is essential in scaling them and improving their quality. However, as of now, lawyers do not have the tools or infrastructure to develop visual contracts. Legal research databases that lawyers generally use are not programmed to highlight visuals as a result of which lawyers find it challenging to locate examples of suitable visualisations. Form books, another resource that lawyers fall back on, also do not provide examples of visualisations. The softwares that lawyers use is not equipped to produce sophisticated visuals. Most importantly, lawyers do not have the skill sets to visualise information or to literally draw [13].

To create the infrastructure necessary to develop visual, simplified contracts, we have developed the following insights along with the working group members:

  • Currently, a majority of the contracts are prepared and executed by the law firms. While there are efforts made to involve graphic designers to improve the readability of the contracts, it is largely limited to improving visual appeal of the contracts by changing colours, layout, font and logos. More far reaching changes are needed instead. Law firms need to take a multidisciplinary approach to developing contracts. This includes collaborating with information designers and graphic designers while developing content of the contracts to make them easy to read through use of plain language as far as possible. This way, the information designer can help in layering and visualising information.
  • Apart from collaborating with information designers when crafting contracts, legal professionals and businesses can also be trained in using tools and techniques that are essential in creating visual, simplified and plain language contracts. World Commerce and Contracting is one such organisation that organises workshops to provide training in crafting visual, simplified, plain language contracts. The contract design pattern library developed by the organisation contains templates which users can take inspiration from when designing contracts [14]. Templates that can guide in organising information, designing layout of the document, using the right visuals such as icons, flowcharts, tables can be developed for ease of use and scale. This is one of the best practices in the field and should be utilised for replication across organisations.
  • Another approach towards optimising user-experience is garnering feedback of users and improving the contract or service delivery model based on the feedback. Literature indicates platforms providing online contracts have conducted surveys and focus-group discussions to identify contracts users need most. They also follow an iterative process where they test their product with a small group of users and improve the design of the product based on feedback [15]. The experience of Avodocs also indicates that developing a prototype of an online contract and then testing it with end users is essential to improving the quality of the product and platform.
    In the case of visual contracts, simplified and plain language contracts, the experience of WCC and Creative Contracts suggests providers have difficulty with user testing as they are third party suppliers of a product and do not interact with end-users. However, experts agree that user testing is essential to improve the design of simplified, visual and plain language contracts as well.
  • Besides creating the necessary infrastructure, experts also suggest that the approach of online contracting towards developing user-friendly contracts also needs to change. Currently, online contracts use templates of contracts that contain standardised clauses and legal language. These templates are vetted by lawyers which users can customise to suit their needs. Since online contracts are derived from traditional contracts, they pose the same challenges to users as traditional contracts do, except that they are more affordable than traditional, lawyer-drafted contracts. To achieve user-friendliness in its true sense, online contracting companies need to shift from using templates of traditional contracts to developing visual, simplified and plain language contracts.

2.2 Showing and optimising the benefits for client companies

The clients who purchase simplified, plain language and visual contracts are often large companies who offer contracts to their employees, suppliers and customers. The benefits derived by employees, suppliers and customers from user-friendly contracts are obvious in the sense that they understand their rights and obligations better.  But the benefits to client companies who develop and purchase user-friendly contracts have not been demonstrated [16]. To get more companies interested in user-friendly contracts, experts suggest developing a value proposition of these contracts for client companies.

To develop a value proposition for client companies, we have developed the following insights along with the working group members:

  • Studies have shown that companies such as Shell and General Electric report a reduction in negotiation time, fewer revisions to the contract and a high number of accepted terms and conditions when using simplified, visual and plain language contracts in place of traditional contracts [17]. Monitoring and measuring such outcomes using specific indicators can provide strong incentives to the client companies. These indicators, namely change in time required to negotiate a contract with the other party, the number of revisions made by the other contracting parties and the number of accepted terms and conditions can help the providers of user-friendly contracts to demonstrate benefits to client companies.
  • Aurecon in Australia offers comic employment contracts to its employees based in Australia, New Zealand, Asia, South Africa and the Middle East. “Sometimes with contracts it feels like we sign it without really understanding it because it's too complex - we wanted to take that away because that's not a great way of starting an employment relationship...It's got to be built on trust from day one. We're not trying to hide anything in our employment contracts" explains Aurecon’s Chief People’s Officer [18].
  • There are also companies that actively support corporate social responsibility, or are more conscious about fostering stakeholder relationships. For such companies, a value proposition on social benefits of user-friendly contracts is easier to offer. To demonstrate social benefits, the lived experience of the end-users of the contract can also be documented. For instance, a video made on Comic Contracts shows that cocoa farm workers who could not properly read or write felt empowered when their employment contracts were designed in the form of a comic, as they understood the contract independently, without the need for any assistance [19].
  • More rigorous evidence of the benefits of user-friendly contracts can also be generated by conducting in-depth interviews with end-users to examine how they benefited from the contract. The outcomes that user-friendly contracts can deliver can also be monitored using the following indicators: 1) change in percentage of people who understood the terms, conditions, duties and rights described in the contract 2) change in percentage of people who understood the complete contract.

2.3 Changing the mindset of lawyers and companies on contracting

Lawyers prefer to rely on long-established standard contract terms, language, formats and precedent documents. The use of visuals in contracts is not widely prevalent.  The law school curriculum does not introduce the students to principles of legal design thinking or re-imagining the way contracting can be carried out. Law schools teach students how to draft a contract and use case laws but they do not train students on how to visualise information [20]. While plain language is comparatively more commonly utilised in the justice sector, legalese is still the norm for drafting of the contracts in the majority of the legal world. Discussions with working group members indicate that legal and business professionals are averse to removing standard clauses in contracts [21].

A part of this is also the awareness challenge. Many a times, legal professionals and businesses are unaware of visual, simplified, plain language contracts [22]. To increase the usage of user-friendly contracts, it is essential to change the mindset of legal professionals. To that end, we have developed the following insights along with the working group members:

  • Scale the messaging/marketing to ensure better uptake of user-friendly contracts. This can be done with the help of use cases, emphasising how the private and public sectors embrace change. One such example is usage of visuals in the form of flowcharts, tables replacing long paragraphs, irrelevant clauses and legalese [23]. Another example is that of the Government of Indonesia which has adopted simplified, visual contracts in its procurement process [24].
  • Make allies with lawyers who work in top law firms and other influential figures in the legal profession. If influential figures promote and use simplified, visual and plain language contracts, others will be encouraged to follow suit.

2.4 Developing a sustainable financial model

Previous research conducted by HiiL indicates that user-friendly contracts can adopt two types of pricing models. One, where the company charges a fixed fee differentiated per type of product and two, where the company offers contracts for a subscription fee. Companies offering online contracts usually charge a subscription fee such as LegalZoom in the USA and LawPath in Australia [25]. In case of contracts that are visual, simplified or presented in plain language, client companies request consultants/consulting companies to craft the contract. Insights from case studies and discussions with working group members indicate that:

  • Market mechanism provides an avenue for developing a sustainable revenue model for creators of user-friendly contracts. For platforms that provide document automation as well as for those providing services of creating simplified contracts through the use of visuals and plain language, businesses and corporations are the primary customers. Having said that, in many cases, the ultimate user or beneficiary is an individual who is the other contracting party. A model which is business to business (B to B) is often a starting point for the private providers. Over time, innovators move to a business to customer model (B to C). Having differential price points for businesses and individual consumers can help in finding financially sustainable growth. This in turn, creates the capacity to provide affordable contracts to everyday people.
  • Providers of document automation platforms that are able to systematically scale their ventures often work with a model enabling the customers to access a set number of documents free of charge. Customers with higher demands in terms of number of documents as well as advanced features like team collaboration on the document, electronic storage and signature can be charged on the subscription model.

2.5 A supportive regulatory environment

Providing user-friendly contracts remains an area of expertise for private providers and the regulatory barriers are not as significant as experienced in some of the other gamechanger categories. The barrier to overcome is that of slower adoption and integration by the legal fraternity in general. Having said that, there are still some regulatory impediments to overcome. LegalZoom, a leading provider of user-friendly contracts in the USA, has had to fight the legal provisions that only lawyers are allowed to provide legal advice. It was challenged by the American Bar Association in multiple jurisdictions [26].However, as the platform gained popularity among people, bar associations made space for the providers of user-friendly contracts to operate, provided that customers be informed by the private providers that such contracts are not equivalent to legal advice of lawyers [27].

Over a period of time, several online contracting platforms have emerged in high income countries which indicates that the regulatory environment has not posed a challenge to their services. However, the demand for online contracts in low income countries is relatively small. People still prefer to obtain contracts from lawyers indicating the need for a change in the mind-set of people as well as legal professionals.

As for simplified, visual and plain language contracts, they are still in the nascent stages of market adoption. Most legal professionals or bar associations have so far not commented on their enforceability so there is uncertainty among legal professionals and the business community about their enforceability. However, Australia’s former High Court Chief Justice Robert French stated at a conference hosted by the University of Western Australia in 2017 that there was “no reason in principle why pictorial contracts explained orally or supplemented textually or contextually could not be enforceable in the same way as any other contract” [28].  Despite this remark in support of visual contracts, developers of visual contracts often find themselves facing questions around legal enforceability.

The support of regulatory bodies in the form of an enabling regulatory environment is essential in scaling user-friendly contracts. To create this enabling environment, we have developed the following insights along with the working group members:

  • Following the example of Robert French, the former Chief Justice of Australia, clarifying the question around legal enforceability of visual and plain language contracts by judges can help bring the necessary validity and formal sanction for easier adoption.
  • To encourage lawyers to adopt user-friendly contracts, the formal justice system may consider making them mandatory as was done in the case of mediation in several countries. Otherwise, despite a small percentage of lawyers taking up user-friendly contracts, they will not proliferate among the majority as the latter will focus on risks attached to the same.
  • Law enforcement agencies or regulatory bodies can play an important role by building disincentives for using cumbersome contracts that are difficult to understand for people. This can compel legal professionals to adopt user-friendly contracts more easily.
  • The 2021 Courts (Civil and Criminal Justice) Reform Bill in Singapore provides for removing archaic language in contract documents and replacing it with plain language [29]. Similar initiatives have been taken in the UK, USA, Australia, and Canada [30]. If the justice systems across the world can make similar shifts to using plain language, significant strides can be made in developing a shared movement for adoption of user-friendly contracts.
  • Law schools can be one of the key stakeholders in inculcating the necessary mindset for replacing unnecessary legalese with more accessible language. Incorporating design thinking and exposing newer approaches in law like the proactive law practices to students who are legal professionals of the future can increase awareness about the benefits of user-friendly contracts. This can also equip the students with the necessary skills to design visual, simplified and plain language contracts.

3. Outlook

The potential of user-friendly contracts in bridging the access to justice gap is tremendous. Online contracting has already taken off in high income countries whereas in low income and middle income countries, there is more scope to expand. While online contracts provide easy access to legal documents, they also need to adopt the form of visual, plain language and simplified contracts to enable ease of understanding for users.

 

Visual, simplified and plain language contracts are emerging. To scale the usage of these contracts, there is a need to market the idea and its underlying vision. Regulatory bodies also need to validate the legal enforceability of these contracts which can increase the confidence of individuals, small businesses and legal professionals in using them.

 

The case studies of Comic Contracts and DIYLaw indicate that early stage innovators need significant funding to develop the product and scale it. To attract investors, these innovators need to demonstrate the economic potential of their contracts as well as their ability to increase access to justice. For the latter, they can monitor outcomes that user-friendly contracts have provided to users so far to demonstrate impact to investors and donors alike.

Relational contracting is another approach to contracting that is even more effective in stimulating cooperation, trust and fair distribution of risks and benefits between the contracting parties, instead of the sticking to the exact terms and conditions for eventualities that is part of the existing culture of contracting [31]. As a next step, we expect user-friendly contracts to embrace principles of relational contracting to facilitate the relationship between contracting parties.

4. Authors

This policy brief was written by Manasi Nikam (Knowledge Management Officer),  Kanan Dhru (Justice Innovation Advisor) and Prof Dr Maurits Barendrecht (Research Director) at HiiL

[1] Stefania Passera, Helena Haapio, and Thomas D. Barton, Innovating Contract Practices: Merging Contract Design with Information Design, in Proceedings Of The 2013 Academic Forum On Integrating Law And Contract Management: Proactive, Preventive And Strategic Approaches (2013).

[2] Ibid

[3] Sommers, R. (2021). Contract Schemas. Annual Review of Law and Social Science, 17, 293-308.

[4]  See website of LegalZoom, VakilSearch, DIYLaw, Avodocs, LawPadi.

[5] HiiL (2021). Case study on LegalZoom in Delivery Justice Rigorously; Crunchbase company profiling and funding VakilSearch, Last accessed on January 15, 2022.

[6] Ibid.

[7] Haapio, H., Plewe, D. and deRooy, R. (2016). Next generation deal design: comics and visual platforms for contracting. In Networks. Proceedings of the 19th International Legal Informatics Symposium IRIS (pp. 373-380).

[8] See the different types of contracts developed by Creative Contracts on their website; Waller, R. (2020). Visual Contracts for Shell; Booth, Stephen. (2018). Pictorial employment contracts – a legitimate craze or just plain crazy? Mondaque (online platform).

[9] Assy, R. (2011). Can the law speak directly to its subjects? The limitation of plain language. Journal of Law and Society, 38(3), 376-404.

[10] Read about Creative Contracts’ experience of attracting funds here. HiiL’s Justice Accelerator has funded startups in South Africa such as Creative Contracts. Read more about it here.

[11] Burton, S. (2018). The case of plain language contracts. Harvard Business Review; Read about World Commerce and Contracting work on contract design and simplification here.

[12] Haapio, H., Barton, T., & Corrales Compagnucci, M. (Accepted/In press). Legal Design for the Common Good:Proactive Legal Care by Design. In M. Corrales Compagnucci, H. Haapio, M. Hagan, & M. Doherty (Eds.), Legal Design: Integrating Business, Design, & Legal Thinking with Technology Cheltenham: Edward Edgar Publishing.

[13] Mitchell, J. A. (2018). Whiteboard and Black-Letter: Visual Communication in Commercial Contracts. U. Pa. J. Bus. L., 20, 815.

[14] Contract Design Pattern Library by World Commerce and Contracting. As access on January 12, 2022.

[15] HiiL (2021). Case study on LegalZoom

[16] Interview with Sally Guyer and Stephania Passera, dated November 12, 2021.

[17] Waller, R. (2020). Visual Contracts for Shell; Burton, S. (2018). The case of plain language contracts. Harvard Business Review.

[18] Booth, Stephen. (2018). Pictorial employment contracts – a legitimate craze or just plain crazy? Mondaque (online platform).

[19] Creative Contracts – who we are and what we do.Youtube.

[20] Mitchell, J. A. (2018). Whiteboard and Black-Letter: Visual Communication in Commercial Contracts. U. Pa. J. Bus. L., 20, 815.

[21] Working group session on user-friendly contracts, October 21, 2021

[22] Working group session on user-friendly contracts, March 3, 2022

[23] World Commerce and Contracting (n.d). ‘How Shell have transformed their contracts’, Better Contract Design, Last accessed on 15 March 2022.

[24]  World Commerce and Contracting, (2020). Co-designing Indonesian government contracts for the digital age.

[25] See website of LegalZoom and LawPath.

[26] HiiL (2021). Case study on LegalZoom in Delivery Justice, Rigorously,

[27] Ibid.

[28] Giancaspro, MA. 2020. Picture-Perfect or Potentially Perilous? Assessing the Validity of ‘Comic Contracts’. The Comics Grid: Journal of Comics Scholarship, 10(1): 7, pp. 1–27.

[29] Bill No. 18/202, Courts (Civil and Criminal Justice) Reform Bill, 2021, Singapore.

[30] Assy, R. (2011). Can the law speak directly to its subjects? The limitation of plain language. Journal of Law and Society, 38(3), 376-404.

[31]  Relational Contracting, World Commerce and Contracting, last accessed on 17 March 2022.

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